The Government is likely to miss its target of starting to pay down Britain's
debt, Chancellor George Osborne has said.

Mr Osborne’s own independent experts, the Office for Budget Responsibility, are likely to say on Wednesday that Britain is unlikely to start paying down its debt as a proportion of gross domestic product by 2015/16.

Mr Osborne hinted that he would have to revise his fiscal targets at the Autumn Statement on Wednesday because the recovery had taken longer than “anyone would have hoped”.

He told the Andrew Marr Show on BBC1: “We had two targets – one was to get debt falling as a share of the national income by 2015-16, and also to balance the current budget.

“Now, there’s going to be an independent assessment of both those targets on Wednesday.

“And I have created this independent body - it would be completely unfair and indeed self-defeating in having created this constitutional innovation for me to come on the television a few days earlier and give their verdict.”

The Chancellor also gave a clear indication that – because Britain’s debt was taking longer to pay down - wealthy pensioners are likely to have to pay more in tax.

He said: “I’m very clear going forward we’ve got to deal with this deficit, it is going to take longer – that means more difficult decisions and it’s got to be done fairly, and that means yes, the richest need to bear their fair share – and they will.”

He confirmed that he had blocked Liberal Democrat plans to impose a tax on expensive houses, through stamp duty hikes or new council tax bands.

The Sunday Telegraph disclosed today that Mr Osborne is expected to lower the annual limit of tax relief that can be claimed on pension contributions in a move which could bring in between £600million and £1.8billion.

Mr Osborne also said he would do more to “tackle welfare bills” suggesting he wanted payments to be cut.

He said: “We’ve already made £18billion of savings from the welfare bill; you will have to wait and see what happens on Wednesday.

“But we’re determined to reform welfare, not just to cut bills, but so that work always pays, that it’s always better off for someone to work that extra hour, to go out and get the job, and fundamentally that is about creating not just a fairer society, but a more competitive society. Britain cannot compete in the global race if it is shackled with welfare bills that it simply cannot afford.”

However speaking moments later, Lib Dem party president Tim Farron suggested that that the Lib Dems had blocked any cut in welfare payments, particularly to those under-25 years old.

He told Murnaghan on Sky News: “Young people who have housing benefit while they are trying to make away on low income jobs, the Tories want to stop that housing benefit, we will stop that…

“The Conservatives have said that there is not going to be a mansion tax and if the Prime Minister does not want that even though there is strong public support for it then I guess that’s that.”